Market News

Cash surety for workers who fail to get houses

James Macharia
James Macharia, CS for Transport, Infrastructure and Urban Development. FILE PHOTO | NMG 

Workers who retire before getting a house under the proposed government housing plan will get back contributions with interest, CS for Transport, Infrastructure and Urban Development James Macharia has said.

Those who exceed 15 years in the fund without the benefit will also be refunded.

Mr Macharia said the ministry held consultations with Parliament and the Senate and agreed that the 1.5 per cent monthly contribution to the National Housing Development Fund (NHDF) towards housing will not expose workers to losses.

“We have reached a compromise and agreed that if you invest every month and after you retire you haven’t got the house, you will get your money back. We have agreed with both houses. Nobody will lose out,” said Mr Macharia.

The accumulated contribution, he explained, will be paid out with a return just like that of the National Social Security Fund since it will be put in high-appreciation housing units and property markets.

The announcement came as MPs attempted to short-circuit President Uhuru Kenyatta’s ambitious housing plan contained in the Big Four agenda targeting 500,000 homes. The MPs said the scheme would cause a significant cost burden to companies while hurting workers.

Workers will contribute 0.5 per cent of gross pay up to Sh5,000 a month and employers will match the same.

The CS said the government has signed MoUs with governors to support the plan by giving them land to put up at least 2,000 units per county.

The government is also banking on the World Bank for support as well as pension schemes. Chairman of Association of Pension Administrators of Kenya Hosea Kili said that pensioners hope the government will make housing a pre-retirement package to encourage workers to embrace the plan.